As economic crisis deepens, private foundations step into the breach

SHOWING INITIATIVE: The GE Foundation, General Electric’s philanthropic arm, donated $10.5 million to United Way of America – the largest single commitment for shelter assistance and homeless services so far.

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As debate continues in Congress on how best to give a genuine boost to the troubled economy, some of the nation’s foundations have responded quickly to the crisis in their local communities and nationally.

Despite being hit hard themselves by the stock market’s decline, close to 50 foundations have committed more than $100 million so far toward efforts to reduce foreclosures, provide financial counseling, and shore up services to the rising numbers of jobless and homeless.

“The typical way a foundation responds [during an economic downturn] is by trying to hold giving as stable as possible, but some have made exceptional commitments,” says Steve Lawrence, senior research director at the Foundation Center, in New York.

The center is monitoring daily the philanthropic community’s response to the crisis on an interactive website (foundationcenter.org/focus/economy).

The future remains cloudy for foundations themselves. A survey by the Chronicle of Philanthropy released last month found that many had lost almost one-third of their assets. Of the 73 grantmakers that provided data for 2009, 39 foundations plan to decrease their contributions this year, 22 say their grantmaking will stay about the same, and 12 plan an increase. Some are cutting back on travel, conferences, and staffing.

Overall giving will probably be down in 2009, says Dr. Lawrence, and there could be an even bigger negative impact in 2010. Large foundations determine grant budgets based on a rolling average of asset values over a three to five year period.

“While 2008 was a bad year, 2007 was good, but we may run out of good years,” Lawrence explains. “It depends on how the market fares.”

Community foundations have clearly taken the lead in responding to needs for human services in their local areas.

While its region is relatively affluent, Silicon Valley Community Foundation found during grant planning last year that unprecedented changes were occurring, beyond those experienced during the dotcom bust. The Second Harvest Food Bank, for example, received more requests than at any time in its 34-year history, many of them from people who had never asked for help before.

“Even a year ago, we started to learn about foreclosures, the lack of financial literacy among people, initial job losses,” says Emmett Carson, the foundation’s CEO and president. “We were listening early on to the canaries in the mine, so that enabled us to build strategies which now appear to be right on point.”

After an initial $1 million grant from its own endowment, the foundation approved an additional $1 million challenge grant, which brought in $1.7 million from the community in seven weeks. It promoted a few local organizations serving those in need on its website and garnered another $1.5 million.

“There is still tremendous accumulated wealth in this community – and people who care,” Dr. Carson says of the $5.2 million they created and leveraged in recent months to give to 47 nonprofits serving those in need.

“A lot of the corporate giving is focused on housing and foreclosures, and this is not an area foundations typically fund,” Lawrence says. “This shows they are willing to innovate.”

Yet corporate support may be limited, since almost a quarter of grant dollars in 2006 came from foundations in the banking and financial sector, he adds.

The MacArthur Foundation has mounted a major effort for its hometown.

President Jonathan Fanton announced in late 2008 that it will devote $68 million in grants and low-interest loans over two years “to keep homeowners in their homes, assist renters forced to move as a result of foreclosure, and help the City of Chicago put vacant foreclosed houses back into productive use as quickly as possible.”

Its goals are to reach 10,000 households, prevent at least 2,700 foreclosures, provide counseling to 6,000 homeowners, and leverage more than $500 million in financing to keep neighborhoods from declining.

Three foundations are focused on the big picture: finding out how this economic debacle came about so as to avoid a similar crisis in the future.

The Alfred P. Sloan, Ford, and Citi foundations have made grants to study the financial crisis and educate the public about it.

“That’s tremendous foresight when we are clearly still in the midst of this,” Lawrence says.

Yet for those on the front lines, grantmaking is only part of the job. None of the safety-net providers can provide emergency housing and services to cover thousands of laid-off persons just with foundation grants and individual donations, Carson says. “So we see part of this as working with city, county, and state governments to fashion partnerships – and to create a systematic response to the problem.”